WorldTraveler
Corn Field
- Dec 5, 2003
- 21,709
- 10,721
I have to tell you how flattered I am that you are crying for me less than a week after I leave the country for a little R&R.
Since you asked, I do have to tell you UA people while standing in line at the ATM on arrival at a particular continental European airport, I was confronted by a woman who had just flown in on UA from IAD and was fuming at how bad the service was. I'm sure you can't believe it but I'm thinking, "Can I not get away from this stuff even on vacation?" The woman went on and on about how rude the flight attendants were and how worn the plane was.... Bottom line was this woman did not have a good experience on UA and didn't hesitate to share it will a half dozen or more people in line who were listening.
Now, back to the issue which you seem to want me to address.
DL recognized over a year ago that this type of change of control activity is a risk when in bankruptcy. DL would also have not hesitated to sell out a year ago but it's obvious no one wants a sick company. DL has turned themselves around remarkably which is why they are now so attractive. They are growing and still have considerable ability to redeploy assets which is exactly what US is interested in - a growing revenue stream. Have you noticed that most of US' new int'l cities are cities where DL has been particularly strong? US knows where DL is making money.
As I said before I left, I believe this merger attempt will fail for several reasons.
1. Hostile takeovers in the airline industry never work. The fastest way to scare away investors is for them to see a bunch of disgruntled employees. I have seen DL employees wearing "Keep Delta My Delta" buttons. Sounds like DL employees are ready to fight to stay independent. And apparently their cmpany supports the fight in order for them to allow those buttons. DL employees may not be largely union but they are not dumb and they are not docile. US just gave them a cause for which they can stand shoulder to shoulder with management on so as to strength management-employee relations.
2. Regulatory issues - despite US' posturing, there is not legitimate way to reduce the overlap between US and DL still keep the company viable. US and DL are profitable on the east coast BECAUSE they serve key markets. If you start ripping out the best pieces of either airline in order to meet regulatory hurdles (which themselves could be a lengthy process scaring away creditor support), the company is not viable any longer. DL shouldn't look too far to find real experts that could testify to that effect.
3. Civic and governmental support. DL does a very good job of getting its communities behind it. The threat of Georgia losing its largest private employer (or a substantial portion of the jobs DL provides in Atlanta) is more than those politicians are willing to risk. Same thing can be said about Ohio and Utah. US hasn't been willing to say where it will cut service but it is obvious that lots of communities through the east coast will be impacted; just pulling out 2 RJ flights out of a combined 8-10 in some cities is enough to make alot of politicians quickly side w/ DL that this proposal is bad for the competitive landscape.
There is ABSOLUTELY no indication that this merger is needed. DL is not failing - unlike US a cuople years ago. Talking about pulling out capacity to make more profits may sound good to Wall Street but it is the last thing politicians and consumer groups want to hear. They will shoot this proposal down faster than a US lav truck driver heading for the parking lot at 11 pm in PHL. And the same principle will apply to every other non-distressed merger that is attempted in the industry.
The only group that really supports this deal is bondholders because they are slated to get a slightly better payout that what DL is EXPECTED to offer. Problem is that DL hasn't even proposed a reorg plan so it won't be hard for them to beat it. And there are significant DL creditors that could stand to lose alot - not exactly putting them in a position to support the deal.
And the fact still remains that DL has the exclusive right to file a POR through Feb 15. DL says they will file one in December, well in advance of the end of their period of exclusivity. Courts rarely allow a competing plan to be presented for a company that is successfully reorganizing. Even if the creditors want changes, DL will have the right to make those adjustments as long as that period of exclusivity remains in place. And as we saw with UAL, that process can drag on for 3 years.
So all of you can get your undies all worked up that DL will suffer some terrible fall but the indications are pretty strong that DL has every reason to expect that it will emerge from bankruptcy successfully as an independent, standalone airline as it said it would a year ago. The absurdity of US' proposal only diminishes the likelihood that someone else can come in and succeed at a future proposal.
Now if you ALL will excuse me I have a suitcase full of laundry to wash.
Since you asked, I do have to tell you UA people while standing in line at the ATM on arrival at a particular continental European airport, I was confronted by a woman who had just flown in on UA from IAD and was fuming at how bad the service was. I'm sure you can't believe it but I'm thinking, "Can I not get away from this stuff even on vacation?" The woman went on and on about how rude the flight attendants were and how worn the plane was.... Bottom line was this woman did not have a good experience on UA and didn't hesitate to share it will a half dozen or more people in line who were listening.
Now, back to the issue which you seem to want me to address.
DL recognized over a year ago that this type of change of control activity is a risk when in bankruptcy. DL would also have not hesitated to sell out a year ago but it's obvious no one wants a sick company. DL has turned themselves around remarkably which is why they are now so attractive. They are growing and still have considerable ability to redeploy assets which is exactly what US is interested in - a growing revenue stream. Have you noticed that most of US' new int'l cities are cities where DL has been particularly strong? US knows where DL is making money.
As I said before I left, I believe this merger attempt will fail for several reasons.
1. Hostile takeovers in the airline industry never work. The fastest way to scare away investors is for them to see a bunch of disgruntled employees. I have seen DL employees wearing "Keep Delta My Delta" buttons. Sounds like DL employees are ready to fight to stay independent. And apparently their cmpany supports the fight in order for them to allow those buttons. DL employees may not be largely union but they are not dumb and they are not docile. US just gave them a cause for which they can stand shoulder to shoulder with management on so as to strength management-employee relations.
2. Regulatory issues - despite US' posturing, there is not legitimate way to reduce the overlap between US and DL still keep the company viable. US and DL are profitable on the east coast BECAUSE they serve key markets. If you start ripping out the best pieces of either airline in order to meet regulatory hurdles (which themselves could be a lengthy process scaring away creditor support), the company is not viable any longer. DL shouldn't look too far to find real experts that could testify to that effect.
3. Civic and governmental support. DL does a very good job of getting its communities behind it. The threat of Georgia losing its largest private employer (or a substantial portion of the jobs DL provides in Atlanta) is more than those politicians are willing to risk. Same thing can be said about Ohio and Utah. US hasn't been willing to say where it will cut service but it is obvious that lots of communities through the east coast will be impacted; just pulling out 2 RJ flights out of a combined 8-10 in some cities is enough to make alot of politicians quickly side w/ DL that this proposal is bad for the competitive landscape.
There is ABSOLUTELY no indication that this merger is needed. DL is not failing - unlike US a cuople years ago. Talking about pulling out capacity to make more profits may sound good to Wall Street but it is the last thing politicians and consumer groups want to hear. They will shoot this proposal down faster than a US lav truck driver heading for the parking lot at 11 pm in PHL. And the same principle will apply to every other non-distressed merger that is attempted in the industry.
The only group that really supports this deal is bondholders because they are slated to get a slightly better payout that what DL is EXPECTED to offer. Problem is that DL hasn't even proposed a reorg plan so it won't be hard for them to beat it. And there are significant DL creditors that could stand to lose alot - not exactly putting them in a position to support the deal.
And the fact still remains that DL has the exclusive right to file a POR through Feb 15. DL says they will file one in December, well in advance of the end of their period of exclusivity. Courts rarely allow a competing plan to be presented for a company that is successfully reorganizing. Even if the creditors want changes, DL will have the right to make those adjustments as long as that period of exclusivity remains in place. And as we saw with UAL, that process can drag on for 3 years.
So all of you can get your undies all worked up that DL will suffer some terrible fall but the indications are pretty strong that DL has every reason to expect that it will emerge from bankruptcy successfully as an independent, standalone airline as it said it would a year ago. The absurdity of US' proposal only diminishes the likelihood that someone else can come in and succeed at a future proposal.
Now if you ALL will excuse me I have a suitcase full of laundry to wash.